Delhi High Court
Altico Capital India Limited vs Sare Gurugram Private Limited & ... on 12 January, 2021
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Reserved on: September 21, 2020
Decided on: January 12, 2021
+ CS(COMM) 1319/2018
ALTICO CAPITAL INDIA LIMITED ..... Plaintiff
Represented by: Mr.Gopal Jain, Sr.Advocate with
Mr.Amit K Mishra, Mr.Akshat
Hansaria, Ms.Manasi Chatpalliwar,
Ms.Etisha Srivastava, Mr.Tushar
Bhatnagar and Ms.Astha Ahuja,
Advocates.
versus
SARE GURUGRAM PRIVATE LIMITED & ORS...... Defendants
Represented by: Mr.Rajshekhar Rao, Ms.Pooja Mehra
Saigal, Mr.Amit Singh Chauhan,
Ms.Gauri Puri, Mr.Anandh
Venkataramani and Mr.Hemant
Chauhan, Advocates for defendant
No.4.
Mr.Krishanu Barua and Mr.Sahil
Monga Advocates for defendant
No.6.
Mr.Ashim Sood, Mr.Prabhav Shroff,
Mr.Apoorva Gupta and Mr.Rhythm
Buariah, Advocates for defendant
No.15/KKR.
Mr.Vijay Nair and Mr.Manoranjan
Sharma, Advocate for Intervenor-
Wafra Capital in OA No. 23/2020.
CORAM:
HON'BLE MS. JUSTICE MUKTA GUPTA
I.A. 17846/2018 (under Order XXXIX Rule 1 and 2 CPC)
I.A. 199/2019 (under Order XXXIX Rule 4 CPC-by defendant No.4)
I.A. 10/2020 (under Order VII Rule 11 CPC-by defendant No.4)
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1. This suit has been filed by Altico Capital India Ltd. (in short „Altico‟)
impleading 14 defendants, that is, SARE Gurugram Pvt. Ltd. (in short
„SARE Gurugram‟); Ramprastha SARE Landholding Company Two Pvt.
Ltd. (in short „SARE Ramprastha Two‟), Ramprastha SARE Landholding
Company Five Pvt. Ltd. (in short „SARE Ramprastha Five‟); SARE Public
Company Ltd. (Cyprus) (in short „SARE Cyprus‟); Avon Infracon Pvt. Ltd.
(in short „Avon‟); Brilliant SARE Realty Pvt. Ltd. (in short „SARE
Brilliant‟); Impact SARE Magnum Townships Pvt. Ltd. (in short „SARE
Impact‟); SARE Realty Projects Pvt. Ltd. (in short „SARE Realty‟); SARE
(Cyprus) SPV (No.4) Ltd. (in short „SARE Cyprus SPV-4‟); SARE (Cyprus)
SPV (No.11) (in short „SARE Cyprus SPV-11‟); SARE Cyprus Ltd. (in
short „SARE Cyprus Ltd.‟); SARE Realty Singapore Lte Ltd. (in short
„SARE Singapore‟) (all group companies of SARE Group); Axis Trustee
Services Ltd. (in short „Axis Trustee‟) and Vistra ITCL (India) Limited (in
short „Vistra‟) as defendant Nos. 1 to 14 respectively.
2. In the suit, the plaintiff inter alia prayed for a decree of permanent
injunction against the defendants (a) restraining them from acting in breach
of the Facility Agreement, with respect to changing its management,
shareholding, restructuring both corporate and capital, and charter
documents, without prior consent of the Plaintiff, directly or indirectly; (b)
restraining the defendants from acting in breach of the following agreements
with respect to changing its management, shareholding, restructuring both
corporate and capital, and charter documents, without prior consent of the
plaintiff, directly or indirectly viz; (i) Amendment dated 24th November,
2016 to Debenture Trust Deed dated 4th December, 2015, (ii) Memorandum
of Hypothecation executed by Defendant Nos.1, 2 & 3 dated 3rd November,
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2016, (iii) Unattested Share Pledge Agreement dated 24th November, 2016,
executed by Defendant Nos.2 & 3, (iv) Corporate Guarantee executed by
Defendant Nos.2 & 3 dated 24th November, 2016, (v) Corporate Guarantee
executed by Defendant No.8 dated 2nd March, 2017, (vi) Unattested Share
Pledge Agreement dated 2nd March, 2017 executed by Defendant No.8, (vii)
Memorandum of Hypothecation executed by Defendant Nos.1, 2 & 3 dated
24th November, 2016, (viii) Debenture Trust Deed dated 11th April, 2017; (c)
restraining the Defendant Nos. 1, 2, 3 & 8 from changing its board of
director, management of shareholding, restructuring both corporate and
capital charter documents, without prior approval of the Plaintiff, directly or
indirectly viz., and acting in breach of the agreements, executed in
furtherance of the Facility Agreement and Debenture Trust Deed; (d)
restraining the defendant Nos. 4, 5, 6 & 7 from changing its management,
capital structure, or shareholding under the Facility Agreement dated 14 th
May, 2018 without prior consent of the Plaintiff, directly or indirectly; (e)
restraining Defendant No.8 from changing its management and control
without the prior consent of the Plaintiff, directly or indirectly, under the
Deed of Corporate Guarantee dated 14th May, 2018 and Unattested Share
Pledge agreement under the Facility Agreement dated 14 th May, 2018 and
Corporate Guarantee and Unattested Share Pledge Agreement under the
Debenture Trust 2.
3. Briefly the case of Altico is that Altico and KKR India Asset Finance
Pvt. Ltd. (in short „KKR India‟) entered into a Facility Agreement dated 14th
May, 2018 with SARE Gurugram. Under the Facility Agreement, Altico
along with KKR India, the lenders of the Facility sanctioned a loan of ₹100
crores to SARE Gurugram out of which loan amount of ₹60 crores was
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extended by Altico and ₹40 crores by KKR India. In addition to the
Facility Agreement, Altico had previously also disbursed money to SARE
Gurugram and debentures in this regard were issued in favour of Altico
4th
under the Debenture Trust Deed dated December, 2015 (as amended and
restated on 24th November, 2016) and a Debenture Trust Deed dated 24th
November, 2016. Altico had also disbursed money to SARE Realty and in
this regard debentures were issued in favour of Altico under Debenture Trust
Deed dated 11th April, 2017. As a term of the Facility Agreement dated 14th
May, 2018 defendant Nos.1 to 12 were required to create interest, in form of
mortgage, charge, pledge, lien, hypothecation, assignment by way of
security, Deed of Trust, or any other encumbrances on the secured assets, in
orders to secure the facility loan and confer priority to the payment of Altico
and other lenders. Consequently parties executed various ancillary
agreements with the lenders/appointed security trustees, that is, Axis Trustee
and Vistra. After the first disbursement of the loan amount under the
Facility Agreement, the guarantors had a period of one year, to duly execute
mortgage documents in relation to the lands at Panvel, Indore and Amritsar
along with the guarantees. Further in terms of the facilities, defendant Nos.1
to 9 had undertaken to seek the consent of Altico before carrying out any
change in their management, corporate structure or charter documents.
According to Altico, thus under the expressed terms of the Facility
Agreement, defendants were restrained from changing their Board of
Directors, Management or the shareholding, without a prior written consent
of the plaintiff/Altico. According to Altico, Receiver of SARE Cyprus had
already appointed Directors in SARE Cyprus Ltd. and Altico apprehended
that the receiver may make changes in the management of various
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defendants except SARE Cyprus, SARE Cyprus Ltd., Axis Trustee and
Vistra in violation of the various agreements as mentioned in the suit in
relation to the credit facility. It was thus the case of Altico that any change
in the Board of Directors or Management of defendant Nos.1 to 9 would
result in loss to Altico and affect the security creation in its favour.
Consequently, Altico sought the reliefs as noted above.
4. When the suit came up before this Court on the first date of hearing,
that is, 24th December, 2018 this Court based on the representation on behalf
of Altico passed the following order in I.A.17846/2018 (under Order
XXXIX Rule 1 and 2 CPC):
"I.A. No.17846/2018 (under Order XXXIX Rule 1 & 2 CPC)
This is an application under Order XXXIX Rule 1 & 2 of
Code of Civil Procedure, 1908 (CPC) seeking ex-parte ad
interim injunction restraining the defendants from acting in
breach of the Facility Agreement and other ancillary agreement
with respect to changing its management and shareholding
without prior consent of the plaintiff directly or indirectly.
While the application has several prayer clauses, learned
senior counsel for the plaintiff at this stage submits that he will
be restricting his claim to the interim injunction, as prayed
above.
Learned senior counsel for the plaintiff submits that he
had entered into a Facility Agreement on 14.05.2018 and other
ancillary agreement with SARE Gurugram Private Limited and
other companies i.e. defendant nos.1 to 12. It is submitted that
the Facility Agreement created a negative covenant, wherein
clauses 2.12 and 3.6 (bb) of Schedule 6 required a prior
mandatory consent of the Lenders, in order to make any change
in management of defendant no.1 as well as „Third Party
Security providers‟ and „SARE groups‟. The relevant clauses
are as under:
"2.12 Merger
The Company, the Third Party Security providers and
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SARE group shall not except with the prior consent of all
the lenders allow any changes to the management of the
Company or the Third Party Security providers or the
Sare Group, as the case may and/or enter into any
arrangements with its shareholders or creditors or
implementation of any scheme or proposal or taking of
any action for or allowing any restructuring,
reconstruction, consolidation, amalgamation, merger,
demerger or re-schedulement of its debts (or other
similar actions)
3.6 Other Negative Covenants
Without the prior written approval of the Majority
Lenders, the Company shall not (or procure, as relevant)
....
(bb) any direct or indirect change in management and
Control of the Company, Sare Two or Sare Five; or
It is submitted by learned senior counsel for the plaintiff
that they understand from Defendant no.1 that in exercise of its
power, the Receiver of Defendant no.4 has already appointed
his Directors in Defendant no.11. The plaintiff apprehends that
the Receiver will now make changes in the management of the
Defendants in violation of the Facility Agreement and various
other agreements, which would cause irreparable harm and
injury to the plaintiff.
Learned senior counsel for the plaintiff has very fairly
filed a copy of the order dated 12.10.2018 passed by the
learned Single Judge of this Court in CS (COMM) 1179 of 2018
by SARE Public Company Ltd. through its Receiver, wherein an
injunction has been granted in favour of the plaintiff therein
and against the defendant no.17 (plaintiff in the present suit).
By way of the said injunction the plaintiff herein has been
restrained to give effect to the Facility Agreement dated
14.05.2018 to the extent of taking any further lien charge,
security, mortgage or pledge of any of the assets of plaintiff
therein, till the next date of hearing, which is 28.01.2019.
Learned senior counsel further submits at the Bar that
the plaint in that suit is also being filed during the course of the
day and he points out that in the plaint itself the averments have
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been made that „Altico are lenders from whom financial
facilities are being availed by SARE Gurugram by encumbering
the properties/assets of SARE Public and its subsidiaries
including Brilliant SARE Avon.‟
The prayer in the present injunction application is "to
restrain the defendants from acting in breach of the Facility
Agreement and other ancillary agreement with respect to
changing its management, shareholding directly or indirectly
without the prior consent of the plaintiff."
I have gone through the relevant clauses extracted above.
Clauses 2.12 and 3.6 (bb) stipulate that Defendant nos.1 to 12
will not allow any change directly or indirectly in the
management, shareholding/control of the companies, without
prior consent of the Lenders.
A perusal of the order dated 12.10.2018 shows that
injunction was granted to the limited extent of taking any
further lien charge, security mortgage and pledge over any of
the assets of defendant nos.1 to 15 till the next date of hearing
which is 28.01.2019, and does not extend to the relief sought in
the present application.
The plaintiff has made out a prima facie case in its
favour and balance of convenience is also in its favour. This
court is of the opinion that irreparable harm and injury will be
caused, if the relief of injunction as prayed above is not
granted.
The Defendant nos.1 to 12 are hereby restrained from
changing the management and shareholding directly or
indirectly under the Facility Agreement dated 14.05.2018 and
other ancillary agreements without prior consent of the plaintiff
till the next date of hearing."
5. Contentions of learned counsel appearing on behalf of SARE Cyprus
(defendant No.4) seeking rejection of the plaint are two folds. Firstly, in the
entire suit though no cause of action is pleaded against SARE Cyprus
however, surreptitiously reliefs are sought by including SARE Cyprus in the
averments and prayers. It is the case of SARE Cyprus that it is not a
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signatory to the Facility Agreement nor any other agreement even though it
is the parent company of SARE Gurugram and it provided no security nor
any collateral for the Facility Agreement. Further SARE Cyprus has never
authorised SARE Gurugram to make any commitment/undertaking on its
behalf in the Facility Agreement, including the negative covenant of no
change in shareholding/management of SARE Cyprus without prior consent
of the plaintiff/Altico. Secondly, it is contended that since Altico had
assigned the facilities to ACRE, no cause of action subsisted in favour of
Altico and the suit cannot be maintained by consenting to the impleadment
of KKR India as a defendant in the suit.
6. Contentions on behalf of SARE Cyprus in relation to I.A.199/2019
under Order XXIX Rule 4 CPC seeking vacation of the interim order against
SARE Cyprus are that while seeking an interim order from this Court, Altico
suppressed material facts. Altico‟s cause of action was premised on the
order dated 12th October, 2018 passed in CS (Comm.) No.1179/2018 titled
as „SARE Public Company (Through its Receiver) Ltd. vs. Sare Gurugram
and others‟. However, Altico failed to file the plaint and the necessary
documents of the said suit as mandated under Order VII Rule 14 CPC,
intentionally and deliberately suppressing material documents. Further after
appointment of the receiver of SARE Cyprus none of the defendants of
SARE Group can create any security, mortgage, pledge, dispose of any
property, enter into or sign any new contracts or agreements, etc. without
first obtaining the receiver‟s written consent. Thirdly, that on the date of
signing of the Facility Agreement only two Directors were on Board in
SARE Cyprus, both of whom resigned on 29th August, 2018 and thus under
the Companies Law of Republic of Cyprus there was an urgent need to
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appoint atleast two Directors on the Board of SARE Cyprus.
7. Learned counsel for SARE Cyprus further states that despite the fact
that the cause of action in favour of Altico allegedly arose on 12th October,
2018, when a suit was filed by the Receiver of SARE Cyprus being CS
(Comm.) No.1179/2018 and an ex-parte ad-interim order was passed
restraining SARE Entities from creating any lien, charge or encumbrances
on their assets in furtherance of the Facility Agreement, the said interim
order dated 12th October, 2018 was not filed along with the plaint but a copy
of the order was merely handed over across the Bar at the time of hearing.
Therefore, even the document which forms the fundamental basis of cause
of action of Altico was not filed along with the plaint.
8. Mr.Rajshekhar Rao, learned counsel for SARE Cyprus relies upon the
decisions reported as 2006 (3) SCC 100 Mayar (H.K.) Ltd. & Ors. vs.
Owners and Parties, Vessl M.V. Fortune Express & Ors.; (2012) 8 SCC
706 Church of Christ Charitable Trust & Educational Charitable Society vs.
Poniamman Education Trust; 1977 (4) SCC 467 T. Arivandandam vs. T.V.
Satyapal & Anr.; 1998 (2) SCC 70 I.T.C. Ltd. vs. Debts Recovery Appellate
Tribunal & Ors.; 1998 (44) DRJ DB 109 Satish Khosla vs. Eli Lilly Ranbaxy
Ltd.; 2012 (132) DRJ 108 (DB) Raj Kumari Garg vs. SM Ezaz & Ors.; AIR
2005 Mad 72 Suguna Poultry Farm Ltd. vs. Arul Maniamman Textiles Ltd.
Reliance is also placed on the decision reported as ILR 1987 Delhi 210
Pratap Chand Mehta vs. Krishna Devi Mehta to contend that when the suit
is not maintainable it cannot be allowed to continue by a subsequent
application for substitution or addition of parties.
9. According to learned counsel for Altico, one of the condition
precedent for entering into the Facility Agreement with SARE Gurugram
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was that all companies of SARE Group shall not without the prior consent of
all the lenders allow any changes to the management of these companies. In
terms of Clause 2 of the conditions precedent, SARE Cyprus passed the
Board Resolution dated 20th April, 2018 which was signed by the Director of
SARE Cyprus consenting to the issuance of corporate guarantee in terms of
the Facility Agreement. Thus SARE Cyprus was bound by the terms of the
Facility Agreement. Further the present suit was not filed by Altico to
enforce its security under the Facility Agreement or any other independent
guarantee but to enforce a negative covenant restraining the change in the
management and control of SARE Cyprus and other defendants without
prior consent of Altico. It is further contended that a statement made by a
subsidiary company, that is, SARE Gurugram will bind the parent company,
that is, SARE Cyprus.
10. Relevant clauses of Facility Agreement on which Altico basis its
claim are reproduced herein under:
"SCHEDULE 2
CONDITIONS PRECEDENT
PART A
CONDITIONS PRECEDENT TO EXECUTION
1. CORPORATE DOCUMENTS/ AUTHORITY
DOCUMENTS
...
(b) A copy of resolution of the board of directors of the
Company, relevant Guarantors, relevant Pledgers (which are
corporate entities):
(i) approving the terms of, and the transactions
contemplated by, the Facility Documents and resolving
that it execute the Facility Documents to which it is a
party;
(ii) authorizing a specific Person or Persons to execute the
Facility Documents to which it is a party on its behalf;
(iii) authorizing a specific Person or Persons, on its behalf, to
sign (including, if relevant, any Utilization Requests)
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and/or dispatch all certificates, documents and notices to
be signed and/or dispatched by it under or in connection
with the Facility Documents to which it is a party.
SCHEDULE 6
COVENANTS AND UNDERTAKINGS
...
2. GENERAL UNDERTAKINGS
...
2.12. MERGER
The Company, the Third Party Security Providers and Sare
Group, shall not, except with the prior consent of all the
Lenders, allow any changes to the management of the Company
or the Third Party Security Providers or the Sare group as the
case maybe and/or enter into any agreements with its
shareholders or creditors or implementation of any scheme or
proposal or taking of any action for or allowing any
restructuring, reconstruction, consolidation, amalgamation,
merger, de-merger or reschedulement of its debts (similar
actions).
...
3. NEGATIVE COVENANTS
...
3.6. OTHER NEGATIVE COVENANTS
...
3.6.(bb) any direct or indirect change in management and
Control of the Company, Sare Two and Sare Five."
11. This Court during the course of arguments sought a specific reply
from learned Senior Counsel for Altico as to whether SARE Cyprus was a
signatory to the Facility Agreement or any ancillary or supplementary
agreement or guarantee. The answer on this query was in the negative. It
was however stated that even though SARE Gyprus was not a signatory to
the Facility Agreement, or any other ancillary agreement, SARE Cyprus had
passed the Board Resolution dated 20th April, 2018 signed by the Director of
SARE Cyprus consenting to the issuance of corporate guarantee in terms of
the Facility Agreement. Thus SARE Cyprus was bound by its Board
Resolution. When this Court wanted to peruse the said Board Resolution,
learned counsel for Altico stated that this document was not filed by Altico
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along with the plaint, however the same was filed by KKR along with
I.A.494/2019 for impleadment in the suit, as KKR had not been originally
impleaded as a defendant by Altico.
12. I.A.494/2019 came up before this Court on 16th January, 2019.
Admittedly no advance copy of this application was served on learned
counsel for SARE Cyprus and was served only on learned counsel for
Altico. The said application was allowed permitting impleadment of KKR
under Order I Rule 10 CPC based on the no objection furnished by learned
counsel for Altico on 16th January, 2019 itself. Hence, SARE Cyprus had
no knowledge of this purported Board Resolution since the same was never
served on SARE Cyprus or its counsels.
13. For the first time, the purported Board Resolution of SARE Cyprus
dated 20th April, 2018 signed by Mr.Michael Henry O‟ Sullivan resolving
the issuance of the corporate guarantee for securing the repayment of monies
to the lender (i.e. Altico), as a condition precedent in terms of Schedule-2 of
the Facility Agreement was referred to and relied upon by learned counsel
for the plaintiff/Altico during the course of hearing in these applications.
14. Learned counsel for SARE Cyprus took instructions and it was
revealed that the person who signed the said resolution, that is, Mr.Michael
Henry O‟ Sullivan was never a Director of SARE Cyprus. When learned
counsel for Altico was confronted with this fact, learned counsel for
plaintiff/Altico had no reply to the same. Hence the reliance on behalf of
Altico on the purported Board of Resolution dated 20th April, 2018 which
never formed part of the documents of the plaint, is wholly unwarranted, as
the same is not a genuine document.
15. For the facts noted above, contention on behalf of Altico while
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seeking an ex-parte ad-interim injunction before this Court on 24th
December, 2018 that Altico had entered into the Facility Agreement on 14 th
May, 2018 and other ancillary agreement with the defendant Nos.1 to 12
was incorrect in so far as SARE Cyprus was concerned for the reason there
was neither any agreement nor any board resolution of the SARE Cyprus
authorising SARE Gurugram or any other person to incur obligation on
behalf of SARE Cyprus.
16. In para-20 of the plaint, Altico has stated that the defendants were
mandated with multiple obligations under the Facility Agreement dated 14 th
May, 2018 arrived at between Altico, KKR and SARE Gurugram. SARE
Gurugram was thus required to create security and obligations were imposed
on the guarantors. As per para-24 of the plaint, in terms of the negative
covenants, the third party security providers which included defendant
Nos.2, 3, 4, 5, 6 and 7 were bound by the negative covenants. In sub-paras
(a) to (p) of para-25 of the plaint, Altico has enumerated the guarantees,
mortgages and agreements, termed as ancillary agreements, executed by the
various defendants however, there is no mention whatsoever of any
agreement, undertaking, mortgage or guarantee executed by SARE Cyprus.
Again in paragraph-36 of the plaint Altico claims that the defendants
executed various ancillary agreements with defendant No.13, that is, Axis
Trustee on behalf of Altico which restricted the defendants from changing
its management, without a prior notice to the security trustee or the lender.
17. It would be further relevant to note that though there was no
agreement with SARE Cyprus, in para-36 of the plaint Altico specifically
stated that the defendants (which would obviously include SARE Cyprus)
had even executed various ancillary agreements stated above with the
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defendant No.13/Axis Trustee on behalf of Altico which specifically
restricted the defendants from changing its management, without prior
notice to the security trustees or the lenders. While dealing with the specific
deeds of guarantee in para-38, 39, 40, 41 and 42 of the plaint, Altico
nowhere refers to any specific deed of guarantee or the clauses thereunder
with SARE Cyprus however, in para-43 of the plaint again by general
averments it is pleaded that the express clauses restrained the defendants
(which would include SARE Cyprus) from changing their board of directors,
management or shareholding, without prior written consent of Altico or
defendant No.13/Axis Trustee which is acting on behalf of the Altico.
Similarly, while mentioning ancillary agreements in para-67 of the plaint
though no reference is made to any agreement with defendant No.4/SARE
Cyprus however, subsequently, the acts/agreements of the other defendants
are also attributed to SARE Cyprus, thereby including SARE Cyprus in the
sweep with all the defendants.
18. Thus it is incorrectly noted in para-66 and other paragraphs of the
plaint that the Facility Agreement imposes restrictions and negative
covenants on third party security providers, that is, defendant Nos.2, 3, 4, 5,
6 and 7.
19. On pages-886 and 888 of the documents filed, Altico has placed on
record copies of the deeds, unconditional irrevocable deed of guarantee
executed/to be executed by SARE Cyprus however, the fact remains that no
such guarantees were ever executed by SARE Cyprus.
20. From the plain reading of the plaint it is evident that though there is
no specific averment qua SARE Cyprus nor any specific undertaking, MoU,
agreement, guarantees etc. is attributed to be executed by SARE Cyprus
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however, in the sweep all defendants SARE Cyprus has been included in
different paragraphs and thus injunction also sought against SARE Cyprus
besides other defendants. Thus not only is the present suit where there is no
cause of action against SARE Cyprus but the suit contains false and
incorrect pleadings with concealment and suppression of material facts on
oath.
21. Despite specific pleadings in respect of SARE Cyprus in the plaint
that a Receiver of Wafra has been appointed in respect of SARE Cyprus and
a suit being CS (COMM) No.1179/2018 was filed wherein Altico and KKR
were injuncted by this Court neither were the plaint and documents of the
said suit filed nor Wafra impleaded by Altico, rather when Wafra filed an
application for the impleadment, the same was opposed by the
plaintiff/Altico.
22. Further though Altico sought the prayers seeking restrain of the
change of management against all the defendants, the averments in the plaint
in paras-87 and 88 of the plaint are as under:
87. Thereafter, Wafra appointed a Receiver on August 08,
2018, to manage the affairs and assets of the Defendant
No. 4, in reference of the Purchase Agreements dated
April 28, 2011 and Debenture dated April 28, 2011,
regarding the secured assets of the Defendant No.4.
88. It is submitted that, the Plaintiff understands from
Defendant 1, that in exercise of its powers, the Receiver
of the Defendant No.4, has already appointed his
directors, in the Defendant No. 11. The Plaintiff now
apprehends that the Receiver may make changes in the
management of the various defendants, except Defendant
Nos. 4, 11, 13 and 14, in violation of the various
agreements, mentioned earlier in this suit entered, into
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by the Defendants in relation to the credit facilities
advanced by the Plaintiff.
23. It is thus evident that Altico was aware that to manage the affairs and
assets of SARE Cyprus, Wafra has appointed a receiver on 8th August, 2018
and in para-88 of the plaint specifically notes that the receiver of SARE
Cyprus has already appointed its Directors in defendant No.11 SARE
Cyprus Ltd. and Altico apprehended that the receiver may make changes in
the management of the various defendants, except defendant Nos.4, 11, 13
and 14, that is, SARE Cyprus, SARE Cyprus Ltd., Axis Trustee and Vistra
respectively in violation of the various agreements, however, while seeking
the relief in the prayer clause injunction is sought against all the defendants
from changing their management, Directors, shareholdings etc. Similar
averments had been made in para-11 of I.A.17846/2018 but in the prayer 'a'
sweeping interim injunction is sought against all the defendants.
24. Prayers (a), (e) and (h) of the plaint are as under:
a. A decree of permanent injunction restraining the Defendants
from acting in breach of the Facility Agreement, with respect to
changing its management, shareholding, restructuring, both
corporate and capital, and charter documents, without a prior
consent of the Plaintiff, directly or indirectly;
e. A decree of permanent injunction against Defendant No. 1, 2,
3 and 8, restraining them from changing its board of director,
management, shareholding, restructuring, both corporate and
capital, and charter documents, without prior approval of the
Plaintiff, and acting in breach of the agreements, executed in
furtherance of the Facility Agreement and the Debenture Trust
Deeds.
h. A decree of permanent injunction against Defendant Nos. 4,
5, 6 and 7from changing its management, capital structure or
shareholding under the Facility Agreement dated May 14,
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2018, without a prior consent of the Plaintiff, directly or
indirectly.
25. Though in prayer 'e', Altico noted that relief was sought against
defendant Nos. 1, 3 and 8, however, in prayer 'a' injunction is sought against
all the defendants. A perusal of the interim order passed by this Court
reveals that these facts were not brought to the notice of this Court and a
general sweeping order was sought restraining defendant Nos. 1 to 12 from
changing the management and shareholding directly or indirectly under the
Facility Agreement dated 14th May, 2018 and other ancillary agreement
without the prior consent of the plaintiff.
26. In the decision reported as AIR 1994 SC 853 S.P.Chengalvaraya
Naidu (Dead) by LRs. Vs. Jagannnath (Dead) by LRs. & Ors. Supreme
Court clearly held that the Courts of law are meant for imparting justice
between the parties and one who comes to the Court, must come with clean
hands. It can be said without hesitation that a person, who‟s case is based on
falsehood, has no right to approach the Court. He can be summarily thrown
out at any stage of the litigation. Supreme Court noted that a litigant, who
approaches the Court, is bound to produce all documents executed by him
which are relevant to the litigation, if he withholds the vital document in
order to gain advantage on the other side then he would be guilty of playing
fraud on the court as well as on the opposite party.
27. Supreme Court in the decision reported as AIR 1998 SC 1297 K.K.
Modi vs. K.N. Modi & Ors., explaining the expression "abuse of the process
of the court" held that the same has to be understood in the context that the
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process of court must be used bona fide, properly and must not be abused.
Supreme Court noted:
43. The Supreme Court Practice 1995 published by Sweet &
Maxwell in paragraphs 18/19/33 (p. 344) explains the phrase
"abuse of the process of the court" thus:
"This term connotes that the process of the court must be
used bona fide and properly and must not be abused. The
court will prevent improper use of its machinery and will
in a proper case, summarily prevent its machinery from
being used as a means of vexation and oppression in the
process of litigation. ... The categories of conduct
rendering a claim frivolous, vexatious or an abuse of
process are not closed but depend on all the relevant
circumstances. And for this purpose considerations of
public policy and the interests of justice may be very
material."
28. In the decision reported as 1995 (1) SCC 421 Chandra Shahi vs. Anil
Kumar Verma, Supreme Court held:
"1. The stream of administration of justice has to remain
unpolluted so that purity of court's atmosphere may give vitality
to all the organs of the State. Polluters of judicial firmament
are, therefore, required to be well taken care of to maintain the
sublimity of court's environment; so also to enable it to
administer justice fairly and to the satisfaction of all
concerned.
2. Anyone who takes recourse to fraud, deflects the course
of judicial proceedings; or if anything is done with oblique
motive, the same interferes with the administration of justice.
Such persons are required to be properly dealt with, not only to
punish them for the wrong done, but also to deter others from
indulging in similar acts which shake the faith of people in the
system of administration of justice."
29. As noted above, the case of Altico in its pleadings specially qua
SARE Cyprus is based on false and incorrect facts and finally Altico basis
its case on a purported Board Resolution of SARE Cyprus which was a
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fabricated document. No cause of action has been shown in the plaint qua
SARE Cyprus. There is concealment of material facts and documents and
incorrect and false facts have been pleaded on oath. Without any agreement,
guarantee or any board resolution passed by SARE Cyprus, Altico sought
injunction and was granted injunction in the sweep of including it in all the
defendants without SARE Cyprus being a privity to any of the contracts
with Altico. Thus the present suit is a clear abuse of the process of the Court
specially in so far as defendant No.4 SARE Cyprus.
30. It is thus to be seen whether the present plaint can be rejected qua one
defendant, that is, defendant No.4 SARE Cyprus. In the decision reported as
2012 (8) SCC 706 Church of Christ Charitable Trust and Educational
Charitable Society vs. Ponniamman Educational Trust, one of the issue
dealt by the Supreme Court was whether the Single Judge of the High Court
was justified in ordering rejection of the plaint in so far as the first defendant
was concerned. Supreme Court explaining what cause of action was, upheld
the judgment of the Single Judge in so far as it rejected the plaint qua one of
the defendants. It was held that in the absence of any cause of action shown
against the first defendant, the suit cannot be proceeded against the first
defendant and thus the plaint was rightly rejected as against the first
defendant.
31. As noted from the facts above in the entire plaint no cause of action
has been brought out against SARE Cyprus and by pleading causes of
actions against various other defendants, SARE Cyprus is sought to be
brought in the sweep of all the defendants and reliefs sought against SARE
Cyprus. Therefore, the plaint is rejected qua SARE Cyprus/defendant No.4
and SARE Cyprus is directed to be deleted from the array of parties. The
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interim order dated 24th December, 2018 in application being
I.A.17846/2018 under Order XXXIX Rule 1 and 2 CPC is vacated qua
SARE Cyprus and is modified to this extent.
32. Consequently, I.A. 17846/2018 (under Order XXXIX Rule 1 and 2
CPC), I.A. 199/2019 (under Order XXXIX Rule 4 CPC-by defendant No.4)
and I.A. 10/2020 (under Order VII Rule 11 CPC-by defendant No.4) are
disposed of with a cost of ₹1 Lakh against Altico to be deposited in Delhi
High Court Legal Services Committee within four week.
(MUKTA GUPTA)
JUDGE
JANUARY 12, 2021
'vn'
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